Copper price down after $0 Chinese smelter deal

[Ben Graham]

Copper for delivery in September fell by more than 1% to a high of $5.0450 per pound or $11,120 per tonne in early trading on the Comex market on Friday as traders take profits after five straight days of gains.

Pre-emptive buying in the US ahead of likely tariffs has opened up a massive gap between US and London Metal Exchange prices. Benchmark 3-month copper in London was trading higher at $9,887 per tonne on the LME in morning trading in London on Friday.

Reuters reports some Chinese smelters have agreed to process copper from Antofagasta for no charge, but the outcome was better than expected for the smelters, already suffering losses.

Shanghai Metals Market reported that the Chilean miner led with an opening bid of –$15 a tonne a record low for term treatment charges and substantially lower than end-2024 rates of $21.25 a tonne.

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The $0 agreement covers half of Antofagasta’s 2026 copper concentrate production and presents a win for China’s smelters given spot charges are hovering around the –$43 mark, which means smelters would have to pay copper miners for processing their concentrate.

SP Angel, a mining and metals financing firm based in London, notes that the Chinese government has worked hard to reduce costs for local businesses, particularly electricity costs, which support energy intensive industries like refining, and enables Chinese companies to undercut Western counterparts.

In a bid to cover short positions on the London Metal Exchange some Chinese smelters are rapidly ramping up exports.

At least 30,000 tonnes of copper from smelters including Jiangxi Copper and Tongling Nonferrous Metals Group are poised to be delivered to LME warehouses in Asia in the coming weeks, anonymous sources told Bloomberg on Wednesday. 

Reuters, also quoting unnamed persons with knowledge of the matter, reports nearly 10 Chinese smelters were preparing to deliver 40,000–50,000 tonnes to LME inventories.

In a note quoted by Bloomberg, investment bank Goldman Sachs said it expected LME prices to rise to a 2025 peak of roughly $10,050 a tonne in August, as supplies outside the US continue to tighten.

“The ex-US copper market has tightened, causing fears of a regional copper shortage despite the global market currently being in surplus,” Goldman said, adding that once the expected 25% import levies are implemented in September, copper prices should retreat to under $10,000 again.

Ready to ship inventories on the LME have declined about 80% this year to less than a day of global usage, prompting steep backwardation and a surge in exports by Chinese smelters. 

The premium for the cash copper contract over the three-month forward dropped this week from $280 on Monday as news of the exports filtered through to the market.

Like other markets, the copper price has been on a wild ride in 2025, hitting all-time highs at the end of March only to come dangerously close to crashing through $4.00 barely a fortnight later. Year to date the orange metal remains up more than 20%. 

Column: Copper smelters are facing both market and pricing crises